Business News Desk,The central government is considering bringing a law to ban digital loans from illegal online lending platforms and mobile apps. Two officials with knowledge of the matter said on Monday that the central government aims to protect people who borrow money from them. Firstly, they have to face very high interest rates and are treated badly in case of non-payment of loans, due to which some borrowers have chosen the path of death.
RBI’s regulatory framework ready for digital lenders
Unregulated institutions give loans easily to people but in recent years they have adopted such wrong systems of loan recovery which have led to some suicides. The government has already banned many unauthorized apps and now it may also allow RBI to regulate third party service providers. The country’s central bank, the Reserve Bank of India, has also on several occasions appealed to digital loan providers to be cautious. Both officials, speaking on condition of anonymity, said that unregulated lending apps, especially those hosted abroad, are still operating without any checks. Therefore, RBI has created a regulatory framework for the lenders under its control.
RBI has been warning for a long time
RBI regulates the lending institutions under its control with special rules. For example, such loans are deposited directly into the borrower’s bank account. Any service charges to third party loan service providers (LPS) are paid by the regulated entities, not by the lender. But the lack of such norms for unregulated digital lending apps causes trouble for customers. The RBI rules apply to commercial banks, primary urban co-operative banks, state co-operative banks, district co-operative banks, non-banking finance companies (NBFCs), Applicable to Home Finance Companies (HFCs) and all outsourced lending operations. Are. Getting a digital loan for a fintech firm through these regulated institutions is a remote and automated process. It uses seamless digital technology for large-scale customer onboarding, credit assessment, loan approval, disbursement, loan recovery and related customer services.
